There’s an antiquated stock market adage to “sell in May and go away”. The advice is really the back-end of an old two-step trading idea sometimes dubbed the “Halloween Indicator”. The idea is that the market performs best from November through April (inclusively), and that it’s a good idea to get out of stocks in May and sit in cash through the summer and well into the fall. While studies have shown that this very simple trading maxim actually has some statistical merit, the question a lot of folks have is: when do you sell in May - at the beginning or at the end of the month? Well, in 2015, it would have depended on whose stock market you were invested in. It would have been wise to stay invested in the U.S. stock market through the entire month, but if you had been invested in other stock markets around the world, then getting out at the beginning of May would have probably been best. The U.S. market, as measured by the S&P 500, fared better in May than it did in April, but world stock markets advanced less or were negative, and emerging market stocks posted negative returns for the month. Most U.S. and global bond indexes lost ground as well.

March Madness is in full swing with over 60 games having already been played.People all over the world fill out their brackets in hopes that they can predict the future, including the surprise upsets that turn an “also ran” bracket into a money winner. Those who filled out their brackets by working from the Championship game backwards and opting for favorites like Kentucky, Wisconsin, Duke, and Villanova are feeling rather confident right now. In the world of finance, investors are attempting to do the same thing when it comes to the Federal Reserve Bank’s interest policy. The favorites in this game are the consensus opinions regarding when and how the Fed Funds Rate is going to increase, and that has been June and is now starting to get pushed back to September. Instead of analyzing coaches, rosters and game stats, investors are studying Fed statements, inflation data, dollar strength, unemployment figures and economic measures such as GDP.

Deflate-gate and Mixed Signals

A “deflate-gate” of sorts hit Wall Street during the final week of January. On Tuesday, January 27^th, the U.S. Census Bureau reported durable goods orders, core capital goods orders, and inventories; and overall, the information disappointed. Durable goods were down -3.4%. Capital goods orders were down -0.6%. Inventories increased +0.5%. The following day, the Federal Open Market Committee (the “Fed”) released a statement which pointed out that inflation is “anticipated to decline further in the near term,” and indicated they can be “patient” regarding a federal funds rate increase, but could move quickly if economic data improves sooner than anticipated. On Friday, January 30^th, economic growth was reported at 2.6%, which was below estimates. On the same day, Eurostat reported the largest decline in consumer prices in the Eurozone since July of 2009. Equity markets across the globe responded by selling off.